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![]() Journal of Law and Economics 9, October, 259–77. A printer manufacturer innovates a new and better machine and prices it 10 less than their machine which is already a market leader. Cut-throat competition and the long purse. ![]() provisions regarding the definition of predatory or low price fixing. Journal of Economic Theory 27 (2), 280–312. Predatory pricing is a pricing strategy adopted by business actors to eliminate its. Predation, reputation and entry deterrence. ![]() The Federal Trade Commission (FTC) has ruled on this issue and found that predatory pricing can be illegal under certain circumstances. Limit pricing and entry under incomplete information: an equilibrium analysis. Predatory pricing is a practice of charging prices below the cost or average price to eliminate competition. Journal of Law and Economics 23 (2), 289–330. Journal of Law and Economics 1, October, 137–69. Predatory price cutting: the Standard Oil (NJ) Case. Journal of Economic Theory 27 (2), 253–79. The WalMart/Target drug war A prime example of predatory pricing tactics between two large franchises can be seen in. University of Chicago Law Review 48 (2), 263–337. Predatory strategies and counterstrategies. Cambridge, Mass.: Ballinger.Įasterbrook, F. One example of differentiation is offering tiered service plans. The US Computer Industry: A Study in Market Power. The pricing strategy name of predatory pricing is the perfect terminology for this approach. The Antitrust Paradox: A Policy at War with Itself. Low prices will eliminate some of the competitors, and all consumer attention will be focused on one brand with. However, there is a threat of creating a monopoly in the market. Harvard Law Review 88 (4), 697–733.īork, R. Predatory pricing is a strategy of setting prices low in an attempt to eliminate competition. Predatory pricing and related practices under Section 2 of the Sherman Act. This process is experimental and the keywords may be updated as the learning algorithm improves.Īreeda, P. These keywords were added by machine and not by the authors. ![]() Of course, predatory actions are not limited to pricing decisions - for example, a choice of store locations by a grocery chain too near its competitors could be predatory - but our discussion in this short note will focus on predatory pricing and the theoretical controversy surrounding it. Such price-cutting would be called ‘predatory’ (by some) because it is inconsistent with short-run profit maximization by the firm and it appears to benefit the firm in the long run only by bankrupting or otherwise weakening its rival. For example, a firm might cut its price so low in some local market where it faces competition that neither the firm nor its competitor can earn a profit there. It has long been part of the popular folklore of business that firms sometimes engage in predatory actions against their competitors. ![]()
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